Apple and AT&T: A Collaboration of Trust

I am an alumnus of the Darden School at the University of Virginia, and I subscribe to the Darden’s School’s podcast of their series of business speakers. On September 16, 2009, Ralph de la Vega, President and CEO of AT&T Mobility, spoke at the Darden School. Most of the conversation had to do with being entrepreneurial inside a very large organization, but I was especially interested in the discussion about the interaction between AT&T and Apple.

Mr. de la Vega made the point that AT&T and Apple probably would not have done a deal with Apple for the iPhone without having developed trust through the failed collaboration on the ROKR phone – the first phone that could access songs from iTunes. The partnership that has turned out to be so profitable for both AT&T and for Apple required a great deal of trust – AT&T trusting that Apple could develop and manufacture a dependable phone; Apple trusting that AT&T could build its high-speed data network fast enough to feed the demands of new iPhone users; AT&T executives trusting de la Vega that a phone that he could not describe to them would be both a popular success and would make money for AT&T; etc.

Steve Jobs personally called de la Vega to suggest that the two companies “do a phone right.” He allowed de la Vega to come to Cupertino to see an engineering sample of the iPhone, but did NOT allow him to take a sample back to AT&T or even to describe the phone to anyone – not even to the executives or board of directors of AT&T.

Remember, back then Apple had never designed or built a phone. The question of whether a phone without a keyboard had never been asked, because no one had ever tried to develop a touch-screen phone. Agreeing to back the phone was a gamble, and even more so with the demands that Apple was making for sharing revenue from customer contracts.

It is hard to imagine two companies in the technology world with more different cultures than AT&T and Apple. It was fascinating to hear how the companies were able to overcome the barriers of their disparate ways of doing business – especially so in that the primary way to overcome those barriers was through ethics and credibility.